December 2011

What follows is the long version of the published obituary:

Patricia C. Dunn climbed from an entry-level position as secretarial assistant to become the Chief Executive Officer of San Francisco-based Barclays Global Investors (BGI) as it developed into the world’s largest institutional money manager and subsequently served as the Non-Executive Chairman of the largest IT company in the world, died on Sunday morning December 4th at her home in Orinda, California. She was 58.

The cause was ovarian cancer, according to William Jahnke, her husband of 30 years.  Dunn was diagnosed with three different types of cancer over a three-year span starting in 2002, but remained active in various philanthropic causes until recently. 

         

Dunn’s ascent in the investment and information technology worlds was remarkable; academically all she had was a degree in journalism from the University of California Berkeley -- no degree in business, economics, finance, engineering, or any other hard science. Her success in the professional and private life was due in part to her generous and gracious manner, her personal magnetism and the respectful manner in which she conducted her life.

       

Dunn spent her entire 26-year career in management working for the same company, which was known as Wells Fargo Investment Advisors when she joined in 1976 and which exercised outsize influence within the world of finance by introducing the first index fund and other computer-intensive quantitative investment management techniques in wide use today. Dunn started her career with no background in finance--or in business, for that matter--but learned on the job so proficiently that by 1987 she had been promoted to the dual post of Chief Operating Officer and Chief Investment Officer. Dunn moved up to Co-Chairman of BGI in 1995 and finally replaced her longtime mentor, Frederick Grauer, as sole Chairman and CEO in 1998.  Dunn was the first woman to head a large investment management company in the United States.

    

“As I saw it, the firm’s strategic vision was every bit Pattie’s as much as it was anybody else's,” said Blake Grossman, a longtime BGI executive who succeeded Dunn as CEO in 2002. “And whereas Fred and others could be more abstract about it, Pattie made that vision tangible and connected it very directly with what people in the organization wanted to do personally. She was the firm’s heart and soul.”

      

By most accounts, Dunn’s signature accomplishment as Barclay Global Investors chief executive was the creation of its lucrative franchise, investor-friendly Exchange-Traded Funds (ETF) product line, despite the initial resistance from the firm’s London-based corporate parent, Barclays Bank plc. Although BGI did not invent the idea of securitization, it boldly took the lead in applying an obscure application known as warehouse receipts used to securitize commodities to the packaging of common stocks in what became commercially known as exchanged traded funds under the iShares brand, an endeavor in which Dunn staked her job in calling on the Bank to invest $25 million in the project. Once launched BGI succeeded in maintaining a dominant share of the global ETF market even as it surpassed $1 trillion in assets under management. In late 2009, Barclays cashed in on the iShares bonanza by selling BGI in its entirety to BlackRock Inc. for $13.5 billion. Barclays had acquired what was then known as Wells Fargo Nikko Advisors in 1995 for $445 million.

    

The premium-priced BlackRock acquisition affirmed Dunn’s value-creating accomplishments even as it underscored her greatest disappointment as CEO.  Dunn, like Grauer before her, believed that the firm would have performed even better if it had been owned not by a big commercial bank, whether Wells Fargo or Barclays, but by its own senior employees. Dunn was rightfully concerned that in time the Barclay’s Bank culture would undermine the BGI culture of “doing well by doing good.” She spent a year and a half trying to pull together a $1.4 billion management buyout, with backing from the private equity firm of Hellman & Friedman.  The buyout deal finally collapsed after Dunn stepped down as CEO for medical reasons after she was diagnosed with melanoma, her second cancer, in May, 2002.

   

After Dunn relinquished her post there was no one in BGI with the gravitas to push the buyout through over the objections of the London-based Barclays Capital Group who had designs of BGI’s book of business. Dunn remained in the largely ceremonial post of Vice Chairman of BGI until 2006, when she was required to resign by Bank policy when charged with four felonies for her alleged role in Hewlett-Packard’s “Spygate” scandal, adding a shockingly discordant coda to a business career that ranked among the most estimable of the baby-boom generation of executive women.

     

Dunn joined the Hewlett-Packard board in 1998, just about the time she moved up to CEO of BGI.  Dunn was the youngest HP director by a decade and a stranger to all 13 of her fellow board members. Yet in February 2005 she was elected Non-Executive Chairman at the time of the firing of Carleton “Carly” Fiorina, the former Chairman and CEO who attained “rock-star” status as the most powerful woman in business but who failed to make sufficient progress in executing on the 2002 merger of Hewlett-Packard and Compaq Computer, which she led. While Silicon Valley venture capitalist Tom Perkins and former National Science Advisor to Ronald Reagan, George (Jay) Keyworth took the lead in calling for the ousting of Fiorina that included an irreconcilable leak to the press, it was Dunn who is acknowledged as playing a central role in forming the boardroom consensus that resulted in the firing of Fiorina. Installed in the newly-created post of Non-Executive Chairman, Dunn was tasked by the board to direct the search for a new CEO resulting in the hiring of Mark V. Hurd, a Silicon Valley outsider who had spent his entire career at NCR Corp., an Ohio-based company one-tenth HP’s size.

    

Right from the start of Dunn’s tenure as chair, HP was afflicted by high-level leaks of confidential information to the news media. The company, with the board’s knowledge and support, mounted several investigations to identify the source of leaks in 2005 and another in January 2006 after a leak to CNET News reporter Dawn Kawamoto. The investigation to find the source of the CNET leak was authorized by Hurd, directed by a senior HP lawyer reporting to the HP General Counsel and conducted by HP Global Security and IT investigators, along with an outside security consultant under contract to HP Global Security. One of the methods employed in the investigation was the controversial but common practice of obtaining phone records from telephone carriers by “pretext,” speaking to a telephone operator and pretending to be the client.

    

At the May 2006 meeting of the board, Silicon Valley venture capitalist Tom Perkins abruptly resigned in protest when the board voted, over his objection, to ask for the resignation of Jay Keyworth, Perkins' friend and ally on the board, after Keyworth acknowledged being the source of the leak to Kawamoto. Vowing to make Dunn pay for the matter going before the full board, instead of allowing him as Chairman of the Nominating and Governance Committee to handle the findings of the investigation privately with the leaker, Perkins launched a media campaign in September 2006 falsely claiming Dunn secretly hired electronic experts to spy on HP director communications and claiming he had resigned in protest after challenging the ethics and legality of the investigation. The SEC investigated Perkins’ claims and on May 23, 2007 issued a report on the matter, “During the course of the Board’s deliberations, which lasted approximately 90 minutes, Mr. Perkins voiced his strong objections to the manner in which the matter was being handled. Among other things, he repeatedly told the Board that the source of the leak should have been approached “off-line” for an explanation and a warning, rather than identified to the whole Board. He affirmed his belief that the matter should have been handled confidentially by the Chairman of the Board and himself as Chairman of the Nominating and Governance Committee. He also questioned the wisdom of requesting the director to resign over what he perceived to be a relatively minor offense, noting that the director had made significant contributions to HP.” The SEC report makes no mention of Perkins raising concerns regarding the methods employed in the investigation. Perkins lied.

     

Hurd in an effort to protect himself from being collateral damage of Perkins' vendetta switched sides and covered up his responsibility for the investigation, becoming an instrument of Perkins' revenge scheme and dooming Dunn’s chances of surviving the media firestorm Perkins' media team had ignited. Hurd had not only scapegoated Dunn, he pinned the responsibility on her for the 2006 CNET leak investigation he authorized.

     

Investigative journalist Anthony Bianco in his book The Big Lie (2010) called “Spygate” one of the most ‘insidious’ corporate scandals in US history. Up until its publication the media had largely turned a blind eye to the conspiracy that had successfully controlled the narrative of  "Spygate". Perkins, Hurd and others had successfully vilified Dunn in the court of public opinion for a leak investigation she did not authorize, direct or conduct. They forced her off the HP board using coercive tactics, laid out the agenda for the HP Pretexting Scandal hearings on Capitol Hill where she was pilloried, and co-opted the California Attorney General, a career politician the Wall Street Journal law blog attacked for conducting a “ghoulish” prosecution , when at the same time documents obtained by subpoena exposed the real conspiracy were in the hands of state and federal law enforcement and the House Energy and Commerce Sub-Committee.

Bianco was the first journalist to bring to the public’s attention that Dunn was not the spymaster she was made out to be by the press -- “In Global Security lingo, Dunn was a 'client' or a 'complainant;' in other words, she was an outsider who was to be respected for the power of her corporate position and placated if possible, but who was not to be allowed inside the investigation.  As Chair, she would preside over board meetings, regulate the panel’s internal affairs and, when necessary convene it in executive session—that is without the management present.  Dunn would have no role in the management of the company other than acting as a sounding board for Hurd. No one at HP reported to Dunn, who had no authority to hire or fire or incur corporate expenses. She didn’t even have an office at headquarters, operating out of a study of her chalet-style home in the Orinda hills.”

    

Through it all Dunn maintained a steely composure, marshaling the facts to defend not only herself but also HP from a flood of inaccurate and incomplete news reports. She was not without allies.. The Bay Area Business Council inducted her into its Hall of Fame as scheduled and the board of Larkin Street Youth Services, a San Francisco charity, refused to accept her resignation. Hurd was privately supportive even as he vanished from public view. “I felt a lot of support from Mark, even past the point where everybody and his brother told me he’d throw me under the bus,” Dunn said later. “I do feel that if we had stood together, we could have faced Tom down.”  

     

To Dunn’s great disappointment Hurd in the end scapegoated her to save himself from being a victim of the “lynch mob” Perkins' media campaign had incited, engineering her removal from the HP board and consolidating his hold on power by taking on the added role of HP Chairman. Perkins issued a victory statement while cruising the Mediterranean on his mega-yacht, The Maltese Falcon. “My number one thing was to get Pattie out as chairman .. .” he said. “So I’m happy.”

    

In March 2007 a judge vindicated Dunn by dismissing the charges ruling, even before a preliminary hearing, that the State did not have sufficient evidence even to bring her to trial. In "Spygate’s" wake, Dunn was embraced by leaders of the corporate governance movement as a martyr to standing up for best practices in corporate governance.  She was invited to speak before the Corporate Directors Forum and other prestigious groups and was appointed to the board of Stanford University’s governance institute. She also was invited onto the board of governors of the San Francisco Symphony and the University of California San Francisco Medical Center.

    

Meanwhile, Hurd was to resign after the CEO took steps to conceal what the company described as his “close personal relationship” with Jodie Fisher, a former soft porn actress who worked as a greeter at HP corporate events and who accused Hurd of sexual harassment.

     

Patricia Dunn was born on March 27, 1953, in a Burbank hospital across the street from Walt Disney Studios--an appropriate locale in that her parents both had show business backgrounds. Her father, Henry Dunn, was a singer who toured the country for four decades as half of a two-man vaudeville act. Henry was 25 years older than Pattie’s mother, Ruth Marie Tierney, a model and New York showgirl who left the stage to marry Henry - who at that time was an executive of the American Guild of Variety Artists - and eventually raise three children. Pattie grew up in Las Vegas, where her father worked as the Entertainment Director for the Dunes and later for the Tropicana Hotel. “It was not exactly ‘Leave it to Beaver,’ but we were a very close family,” Pattie recalled. After her father's passing, her mother moved the family - which included an older sister and a 2-year old brother - to Terra Linda in Marin County, California, where she attended high school.

     

Dunn -- a national merit scholar -- attended the University of Oregon on a scholarship, but had to drop out after two years to support her mother, who had been devastated emotionally and financially by Henry’s death and by a disastrous second marriage. She transferred to the University of California, Berkeley, graduating in 1975 with a degree in journalism and dreams of becoming the next Tom Wolfe or Gay Talese. However, her mother signed her up with a temporary secretarial agency, which placed her with Wells Fargo Investment Advisers. Dunn hated the idea of working for a bank and intended to stay only as long as it took to launch a freelance writing career. Two years later, though, she finally gave up on journalism and accepted WFIA’s fourth and final offer of permanent employment.

     

Dunn’s accidental career in finance was put to the acid test in 1983. Wells Fargo Bank had appointed a new CEO, who made draconian reductions in the subsidiary’s national and international trust, investment and consulting lines of business with his vision of the bank returning to its California banking roots. By this time, Dunn had risen to the position of portfolio manager and was a key member of a close-knit team of a dozen professionals who managed $25 billion in pension fund and other institutional assets. William Fouse, the senior member of the group, defected to Mellon Bank and brought the entire team with him--except Dunn. Fouse feared that if he left WFIA unable to service its accounts, Wells Fargo would retaliate by getting an injunction against Mellon. “Someone had to stay,” Fouse recalled years later. “It actually was a compliment to Pattie that we thought she could hold the firm together by herself.”

     

Dunn was furious at Wells Fargo for disrespecting WFIA, heartbroken that her colleagues had left her behind, and yet mindful of her obligations to the institutions that had entrusted their funds to the firm. Dunn gathered herself and coolly made the best of a nightmarish situation by demanding a bonus of $25,000 a month to remain at her post. Realizing that Dunn was all that stood between them and the loss of $25 billion in assets, her bosses at the bank agreed, making Dunn, an assistant vice president, Wells Fargo's highest-paid manager. Working 18-hour days for several months, Dunn did indeed single-handedly hold WFIA together until Grauer was hired as the new CEO.  In the end, only one of the firm’s 75 clients withdrew its funds.  

    

Dunn was a quietly charismatic woman who had inherited her mother’s good looks and her father’s stage presence, though she excelled not at singing but at public speaking. Yet she labored in obscurity for most of her career, taking her cues from Grauer, an erudite former finance professor who saw no need for a purely institutional business like BGI to broadly promote itself. As CEO, though, Dunn raised her own profile along with BGI's as the firm invested heavily in making iShares a retail brand.  In 1999, the Financial Times featured her in its “Business Lunch” column, noting her “big blow-dried hair, power shoulders, perfect fingernails” and “white-toothed smile.”  Asked why she wasn’t better known outside her industry, Dunn replied that investment management was just not a glamour business.  “I would have to jump off a building naked to get any coverage in the San Francisco Chronicle,” she quipped.

    

Not six months later, a fully-clothed Dunn did pique the interest of her hometown daily -- and other publications as well -- as she debuted at No. 11 on Fortune magazine’s annual list of the most powerful women in business. Dunn shredded the last remnants of her anonymity by placing just three slots behind Martha Stewart -- and 15 ahead of Oprah Winfrey. Topping the list, as usual, was a woman whom Dunn was just getting to know through her position as a director of HP, Carly Fiorina.

    

Dunn, who was legendarily even-tempered, collaborative and determined in her business dealings, was equally tenacious as a cancer patient. By some accounts, she underwent more chemotherapy at the University of California San Francisco Medical Center than anyone else in the institution’s history, outliving the three-year life expectancy for her type of ovarian cancer by nearly five years. Dunn and her husband endowed a chair at UCSF Department of Surgery and also funded clinical trials of an ovarian cancer immunotherapy at the University of Pennsylvania in which, in some cases, she participated.   

    

Besides her husband Bill Jahnke, who is a former chief executive of Wells Fargo Investment Advisers, Dunn is survived by two daughters, Janai Brengman and Michelle Cox, a son, Michael Jahnke, and ten grandchildren, as well as a brother, Paul Dunn, and a sister, Debbie Lammers, along with their children Paul Dunn, Jr. and Laura, Stephen and Kelly Lammers.

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